Because pension systems across Europe – and beyond – follow different tax models, understanding how Italy interprets them is essential for anyone planning their long‑term financial life here.
How are UK pensions taxed in Italy?
By Gareth Horsfall
This article is published on: 8th May 2026
EET, ETT, or TTE?
Across the world, private pension systems follow a handful of tax models. The three most common are known as EET, ETT and TTE. These refer to how contributions, investment growth and withdrawals are taxed. Many countries, including the UK, use the EET model, where contributions and investment growth are tax incentivised and withdrawals are taxed at standard progressive income tax rates.
Italy, however, uses the ETT model, where contributions into a personal pension ( previdenza complementare) can be eligible for a tax deduction (up to a certain limit), the fund itself is taxed but at the time of the payment of the income a lower income tax rate is applied.
(Only a few countries use the TTE model, where contributions and growth are taxed but withdrawals are exempt).
These differences matter because when someone moves to Italy with a UK pension from the the Italian tax authorities will classify it according to Italian tax law interpretation. Often, a commercialista is left with the decision of ‘using best logic and guidance from the Agenzia delle Entrate. This is where mismatches can arise: a pension designed under one model does not always fit neatly into another.
The EET model (UK)
The EET model is widely used and easy to understand. It allows individuals to save efficiently during their working life and then pay income tax on withdrawals in retirement. Many people from the UK arrive in Italy with personal pensions/SIPP’s/occupational defined contribution pension schemes etc, and the question becomes how Italy should treat them for taxation purposes?
Since Italy taxes its own pension funds during the accumulation phase, it would not make sense for a foreign pension to benefit from tax‑free growth abroad and then also receive Italy’s preferential tax rate on withdrawals. That would amount to a double taxation benefit, which the Italian system is not likely to provide.
The ETT model
Italy’s own system provides for a 100% tax deduction for contributions to a ‘previdenza complementare’ up to a limit of €5300pa (as at 1 Jan 2026) but then taxes the fund during the accumulation phase. Italy also taxes withdrawals, although at a reduced rate for long‑term contributors of between 15 and 9% depending on the length of time contributions has been made.
Despite this, private pension participation in Italy remains low compared to the EU average. Limited tax incentives, restricted investment options and relatively high charges have made private pensions less attractive than other forms of long‑term saving. Many Italians prefer property or alternative investments, and the system has never fully encouraged widespread private pension participation.
So what does this mean for the taxation of your UK pension in Italy?
Given the UK incentivises pension accumulation with tax breaks, then Italy is unlikely to apply its own reduced tax rate on withdrawals, as stated above.
Guidance issued by the Agenzia delle Entrate issued on SIPP’s (found here) seems to confirm the tax treatment as detailed above, indicating that pensions built under the EET model should be taxed as ordinary income when paid out to an Italian resident.
Ultimately, the interpretation rests with the professional preparing your tax return, but with the ruling on this specific case in 2024, we can be assured that treating UK personal and occupational defined contribution pension income as taxable under standard Italian progressive income tax rates is the correct tax treatment in Italy. Choosing a different approach may be possible, but it carries the risk of future reassessment by the Agenzia delle Entrate and possible back fines and penalties.
Qualifying Recognised Overseas Pension Scheme
For those planning to live outside the UK permanently, transferring a UK pension into a QROPS has been an option for many years. These schemes operate under EU‑aligned rules and are designed for individuals who no longer intend to reside in the UK.
The UK has now introduced (from 2025) an overseas transfer charge of 25% on transfers to QROP’s where the pension holder resides in a different state to the place where the QROP’s is registered. Malta was used, prior to this ruling, as a way for EU residents to transfer their UK pensions away from the UK due to Malta’s status as an EU member state and it’s double taxation treaties with all other EU member states. (Italy does not have any QROP’s vehicles to which UK pensions can be transferred) However, given the 25% overseas transfer charge this is not a suitable option for most people.
If there is an overseas tax charge on a transfer to a QROP’s, what can I do instead?
Since Brexit, UK pension providers and UK asset managers should no longer manage monies for non-UK resident individuals due to a loss of licensing and regulatory authority. Therefore, you may find yourself in a position where
a) you are being refused any investment and /or pension advice
b) asked to transfer your pension to another pension provider who can work with you as an Italian resident
c) and/ or take the pension in one lump sum but NOT in income drawdown
Clearly all the options are unsatisfactory and c) itself could generate a big tax liability in Italy if you have a large lump sum, which becomes taxable in one year.
Bear in mind that the 25% tax free lump sum in the UK, would be taxable in Italy as income tax ! As a smart financial planning tip, it is always best to withdraw this sum before becoming a resident in Italy, if possible.
Therefore, the best advice is to transfer to a UK SIPP which can work with EU residents and will allow you the flexibility that a standard UK domestic SIPP would provide. You can get access to a wide range of asset managers and low cost model portfolio solutions. We work with such companies and regularly transfer pensions as a financial planning strategy to ensure you get access to the right advice in Italy based on your other incomes / assets.